On June 30, 2025, the Minister of Finance issued draft legislation to make all Canada Carbon Rebates for Small Businesses non-taxable. This would apply to all payments received by corporations for fuel charge years 2019-20 to 2023-24, as well as the final payment for 2024-25.
Once the legislation receives Royal Assent, the Canada Revenue Agency (CRA) will be authorized to process amended T2 corporation income tax returns for businesses that previously included the Canada Carbon Rebates in their taxable income.
Businesses that filed their 2023 tax return after July 15, 2024, and on or before December 31, 2024, will also be eligible to receive tax-free payments for fuel charge years 2019–2020 to 2023-24 once the legislation passes.
For the 2024-25 fuel charge year, businesses that file their 2024 income tax return by July 15, 2025, will be eligible to receive a tax-free payment. This will be the final Canada Carbon Rebate for Small Businesses payment, following the removal of the federal fuel charge effective April 1, 2025.
To learn more, read the Department of Finance news release from June 30.
